Be Careful with your Reputation!

Careful, originally uploaded by Little Jeane.

This photo carries a serious message.

If you would like to learn how to prevent cracks appearing in your organization’s reputation, find out more at http://reputationdefence.invite43.com

Lies, Lies…..Impact!

How naive some people can be!

Do they really think that in today’s age, lies will not have an impact?

The pathetic handling of the Caster Semenya’s case by the ASA (Athletics SA) is now having a ripple effect.

Leonard Chuene, the president of ASA, has admitted he lied about knowing of the IAAF’s request for tests as well as tests done in South Africa on Semenya before the event.

Worse of all, the ASA council on Thursday decided Chuene could keep his post even after the Department of Sports and Recreation said he should be fired. So by implication, they condone lies.

Is this a case of Medals before truth?

Well, it does not matter what they say or decided. ASA’s reputation is in tatters.

The Business Report today ran an article with the Headline: ‘’Nedbank pulls out as sponsor of ASA events’’

Nedbank, the biggest backer of road-running events for ASA, said sponsorship negotiations this year would take into account the sports body’s handling of Caster’s sex tests. Nedbank has decided to terminate its sponsorship a year earlier due to logistical reasons…….

Obviously the lies and handling of this case, has speeded up the decision process. Nedbank currently is leveraging its approach to sustainability being carbon- free and cannot afford to get their reputation tarnished by standing up for a lie.

It is my professional opinion that many leaders do not understand the ramifications of small actions on their and their organisation’s reputations. Obviously leaders are not being sensitised to the dangers of reputation risk. They do not understand it and think that they can get away with so-called white lies.

The danger is that cracks even when glued up will show up for years.

Technorati Tags: Sport scandals,Lies,Reputation risk

Complaints no longer a Customer Service Issue but a Reputation Issue

In the not so distant past, complaints were regarded as a customer service issue and the responsibility of the Customer Service department to solve.

But no longer.

Social Media such as blogs, Twitter, Facebook and mobile phones have changed the potential impact of a negative experience into one that could potentially be harmful to not just a brand, but also the reputation of the organisation. It is now a Reputation Manager issue.

Let’s look at how the process of complaining have evolved.

A Complaint normally arises when there is an imbalance between a customer’s expectations and reality. Karl-Sven Erikson called this the Moment of Truth experience. The time when a brand and its values become real to the customer.

So this is how a customer would have complained:

1. Customer complains to Company (by telephone, face to face or by letter)

2. Company responds to Customer (typically by letter, e-mail or SMS)

3. If the complaint is ignored, he or she would write again or write to one of the complaint sections in the local newspaper, where their story might be published (Examples – The Star and Beeld newspapers)

4. Some would write and get their story mentioned on websites like http://www.hellopeter.co.za/

5. Based on how the complaint is dealt with, the Customer is either delighted (and may then tell their friends and colleagues in person) or dissatisfied (and will also tell their friends and colleague, but this time a very different story)

With social media, the traditional complaint pattern has been disrupted quite severely. Rather than a private exchange between Customer and Company, the first few steps are public from the very beginning.

From the minute the customer wants to complain their thoughts, experiences and attitudes (whether justified or not) are public knowledge. Complaining on a social network or via Twitter on a mobile phone, now changes the complaint from a rather private and contained experience to a public and widespread affair.

Years ago the experts cited figures that one dissatisfied person could affect 6 people, then the ratio increased to 20 and now I read somewhere the actuaries worked it out that one dissatisfied customer could affect at least 81 others. This on top of the story that we are only a sixth removed away from each other. Today people have the tools with which to damage, if they chose to do so – see my article, The Tools exist to do Damage (http://deonbinneman.wordpress.com/2008/07/24/the-tools-exist-to-do-damage/)

As you can see, it is no longer about responding to a single complaint, but to how to manage an attack that can damage brand reputation. It is now bigger than just a customer service issue.

Blogs, and social media more generally, are a great way for people to distribute their dissatisfaction and thoughts about their experiences. They can get it seen by a large number of people who can link to it, comment on it and reproduce it on their own sites.  Very quickly a company has a story that is no longer private and is also no longer contained. Other people have linked to or reproduced the complaint on their own sites and forums. Some publicly and others in places that even companies cannot see.

The ripple effect can be dangerous.

How does a company know who might be reading the negative story? How do they know how many other people might react negatively?

So, how should a company protect itself.

1. Educate your staff about the danger of negative complaints and its impact not just on the brand but on the reputation of the institution. Show them the influence circle, so that they will clearly understand that every single complaint is serious.

2. Improve your monitoring of negative messaging. Ensure that you have good web and traditional media monitoring processes in place. Make sure that you encourage internal communication about delays, potential problems, snags and behavior, so that potential complaints can be minimised.

3. Develop a policy and procedure for responding to complaints – face to face, written and social media. Here is a very good article that was written about the subject, which includes a great process diagram developed by the US Air Force – http://blog.freshnetworks.com/2009/01/how-to-react-if-somebody-writes-about-your-brand-online/ that might help you.

It is essential that your company develop a response procedure that embodies transparency principles, caring principles, the values of the organisation and social media practices.

4. Create avenues for customers to communicate their thoughts and experiences DIRECTLY to the company and ensure that you listen and respond appropriately. Recently President Jacob Zuma had a hotline installed into his office to deal with issues of negative service delivery. He has nearly a hundred staff members attending to the volume. A Bold step, criticised by many, but definitely a step in the right direction.

One of the biggest lessons in Crisis Management can be used here. Bad things happen to good companies. Organisations make mistakes, BUT IT IS HOW we respond and DEAL WITH THE ISSUE that often can make the real difference.

This difference needs to be carefully defined and implemented.

Technorati Tags: Customer Service,Reputation,Crisis Management,Handling Compliants,Bad customer service experiences

Managers are from Mars, All others are from Venus

Here is a story that resonated with me. It reminded me a lot of the crisis consulting I do….

A man is flying a hot air balloon and realizes he is lost. He reduces height and spots a man down below. He lowers the balloon further and shouts, "Excuse me. Can you help me? I promised my friend I would meet him half an hour ago, but I don’t know where I am."

The man below says, "Yes, you’re in a hot air balloon hovering approximately 30 feet above this field. You are at approximately 42 degrees North latitude and 60 degrees West longitude."

"You must be an engineer," says the balloonist.

"I am," replies the man. "How did you know?"

"Well," says the balloonist, "everything you have told me is technically correct, but I have no idea what to make of your information, and the fact is I am still lost."

The man below says, "You must be a manager."

"I am," replies the balloonist, "but how did you know?"

"Well," says the man below, "you don’t know where you are, or where you are going. You have made a promise which you have no idea how to keep, and you expect me to solve your problem. The fact is you are in exactly the same position you were in before we met, but now it is somehow my fault."

When I speak to managers about the need to plan for crises before they happen, they treat my information sparsely and then when the paw-paw strikes the fan, then they want help.

Only when they are lost.

Product Recalls done Properly reduces Reputation Risk

Many companies fear that widespread disclosure and publicity of product recalls may be harmful to their reputations.

It could be but it depends on how product defects and recalls are handled. These days stakeholders ask for no less, namely that they be informed, especially if the product carries a health & safety danger.

Since a good reputation for product safety and reliability is an essential ingredient of a company’s sales efforts. Handling product recalls professionally can go a long way to safeguard that valuable asset.

The new South African Consumer Protection Act will impact on recall procedures.

However there are other factors to consider:

1. Recall communications is an expensive exercise. It will necessitate the use of mass media techniques depending on the circumstances, and the role of advertising agencies and other role players in this exercise will have to be factored in.

2. Negative publicity about a product before a company can officially respond can be damaging and may lower trust in the product name.

3. A Recall can have a ripple effect, as it may tarnish the reputation of the organisation and its other products. Act speedily and with resolve is key.

4. There may be product liability expenses. In many cases in the USA, litigation resulting in class action law suits have been extremely expensive. (Study Merck and its Viox withdrawal, which has run into billions of dollars).

As with any crisis, there are two things to remember, namely the reality of dealing with the crisis and the perceptions created during the crisis.

The reality of the situation involves dealing with the actual withdrawal and the perception side deals with informing various stakeholders about the withdrawal.

Here then is a short checklist that I have prepared that you may find handy. My advice is to do your homework before a recall occurs. Remember bad things happen to good companies (Murphy’s Law).

The checklist is by no means comparable to a a proper guide compiled by an external consultant working with your crisis team, but should at least prompt your thinking before a recall actually happens..

Product Recall Checklist

1. Because product recall communications and actions are complicated, close coordination of all the activities of various managers will be needed. Many managers will be affected; Sales, Distribution, packaging, quality control, customer service, PR and legal counsel. Outside stakeholders  such as the Media, Advertising Agencies and the authorities such as the SABS may be involved. Who will act as Coordinator?

2. Where outside specialists might be involved, do you have them readily identified as well as SLA’s drawn up, before a recall happens? Consultants and experts identified at the last minute can be very expensive and often there is no professional working relationships between the parties.

2. Who will issue a general statement issued to the widest possible publicity distribution, spelling out the reasons and steps for the implementation of the recall as well as the steps taken to prevent recurrence?

3. Who will prepare the Recall procedure? How will customers return the product? (This protocol should be created prior to a recall)

4. What about Dealer logistics?

5. How will you keep your stakeholders informed about the success of the recall? Remember that some stakeholders will want to know how many products have been returned and at what cost?

6. Who will monitor Media reaction?

Product Recalls executed professionally can go a long way in allaying the fears of the consumer stakeholder and will bring and instil much needed trust.

Technorati Tags: product recalls,product reputation risk,consumer safety

Social Networks poses serious Reputation Risk

Social network poses real reputation risk, a report by audit firm Deloitte has revealed.

The results of Deloitte’s third annual study Ethics & Workplace Survey http://bit.ly/44jcPo, which examines the reputational risk implications of social networks, reveal tension between employers and employees around the use of social media. According to the survey, conducted on 2,000 employees and 500 top executives in the United States, 74 percent of respondents said they believe online social networks make it easier to damage a company’s reputation.

“Online social networks, which enable individuals communicate and share their knowledge and opinions with others, are constantly developing. With this strong phenomenon, the lines between individuals’ private and corporate identities are gradually disappearing,” said Sibel Türker, partner at Deloitte Turkey.

“Individuals have a right to communicate on online platforms, but this can sometimes create negative results that might affect the reputation of corporations and brands. The new Deloitte survey, which reveals the aforementioned concerns, will offer a broad perspective for executives.”

Risks for reputation:

Among the respondents of the Deloitte survey, 74 percent said they agreed that online social networks, such as Facebook, Twitter and Youtube, bear certain risks to brand reputation.

Corporations are sometimes obliged to struggle against the incidents that damage corporate reputation. Online debates, suggestions and criticisms affect enormously a substantial proportion of the news on global brands.

Some 15 percent of the executives surveyed said they are prepared against reputational risks related to the use of social networks, while 58 percent said they are aware of the issue and are discussing measures. Only 17 percent of executives surveyed said they have programs in place to monitor and mitigate possible reputational risks.

Some 60 percent of business executives said they believe they have a right to know how employees portray themselves and their organizations in online social networks, while employees disagreed, as 53 percent said their social networking pages are not an employer’s concern.

The survey also showed there is no easy answer on what kind of attitude business owners and executives should pursue in the face of the current environment. It is not easy to overcome the risks in this field via certain rules or policies. The Deloitte survey showed that even well-defined corporate rules will not change the attitudes of around half of the participants. Therefore, it is important to secure the cooperation of employees through value-based cultures, according to Deloitte.

There is of course another side to the use of social networks said Deon Binneman, international speaker and consultant on Corporate Reputation. The use of social networks can be seen as an engagement tool which should be included in a strategic stakeholder communication plan.

He also said that it was vital to educate and train employees in the importance of reputation (individual & company) so that there would be a clear understanding of reputation as an asset and a risk. If the use of social networks are seen as a strategic tool, then many alternative measures could be dreamed up.

Examples:

1. Can an employee comment on the CEO’s Blog?

2. What about an internal Twitter messaging service, so that we can improve cross-flow of communication?

3. Does the organisation have a listening capability? One that scans internal chatter and monitor online conversations?

All social networks have done is to radically transform the way employees and stakeholders can communicate. Now organisations have to close that transformation process by radically chnaging the way organisations and employees think, act and participate.

This idea was proposed long ago by the author Joyce Wycoff in her brilliant book, Transformation Thinking. This book offers innovative techniques to promote creativity, problem-solving and communication in organisations.

http://www.amazon.com/Transformation-Thinking-Joyce-Wycoff/dp/0425143740

Online Reputation Management is eveolving into a specialist function and Reputation Mnaagers across the Globe should get up to speed with the latest developments in this field.

Chickens, Supply Chain Risk & Reputation

Just read an article http://www.simplygreen.co.za/local-stories/earth-and-animals/chain-store-breaks-ties-with-unethical-hen-breeder.html

Due to the appalling way 1 day old hatchlings have been reported to have been treated the major chain store Woolworths has cut all ties with Jan Serfontein and his son, Jan. They are one of the country’s three biggest chicken farms, Boskop Layer Chickens.

Kevin Korb, Pick n Pay food merchandise director said, Pick n Pay immediately wrote to all its eggs suppliers after the TV programme was aired that exposed "the cruel and inhumane manner in which one-day old male chicks were disposed of" ….

This is an excellent response, but it still raises questions about unethical business practices and issues of sustainability practices and monitoring of suppliers.

Chain stores and other organisations must wake up and realise that their reputation can be tarnished by who they are in bed with.

Supply Chain Risk can have an impact on an organisation’s reputation.

Congratulations to Jacko Maree – the most trusted CEO in South Africa

An article in the Business Day today states that MORE than 200 directors and executives of JSE-listed companies believe Standard Bank’s Jacko Maree is the most trusted CEO of a listed company, according to results of a recent survey on corporate reputation management.

The annual Trust Barometer study by Ask Africa draws a link between strong leadership qualities of the head of a company and its ability to attract talent, customers and investors.

What better way to have your performance and behaviour measured than by your peers in a transparent manner? (This a good example of a 360 degree feedback survey and its value).

The annual Trust Barometer study by Ask Africa draws a link between strong leadership qualities of the head of a company and its ability to attract talent, customers and investors. The Trust Barometer is a corporate reputation benchmark survey that ranks listed and non listed companies across a range of reputation drivers such as innovation, leadership and social responsibility.

“The link between reputation, trust and CEOs are clear, considering that winning companies have winning CEOs and executives,” it says. The study says leadership** is the strongest driver of reputation , and that the responsibility for leadership rests on the shoulders of the CEO, “making his role crucial to the trust and reputation of a company”.

But Ask Africa director Sarina de Beer says reputation management in many companies is not being taken seriously at either board or management level.

Companies only seem to spring into action when their reputation is under threat from a crisis, such as a strike . Management of corporate brand reputation is a distinct management and operational imperative, she says. She faults some listed companies for having a narrow view of who their stakeholders are, limiting them to shareholders and customers.

Read the full article at: http://www.bday.co.za/Articles/Content.aspx?id=80578

It is always good when great minds think alike. In my newsletter Powerlines 87 which I sent out yesterday, I made similar observations about the lack of proactive reputation management by corporates.

It is also intriguing that so many executives profess that they understand stakeholders, until they attend my Stakeholder Reputation Master Classes. So often they come to me afterwards and say, we never knew it was this important and complicated.

Reputation is derived from the way an organisation is perceived by it’s stakeholders and how they measure the institution’s performance and behaviour. Standard Bank, by the way have done a lot of work in this area. They have a dedicated Stakeholder Management unit influencing this process.

Well done to Mr Maree. May your example resonate!

**Footnote – It is interesting that the study shows that Leadership is the strongest driver of reputation, yet few companies have Reputation & Stakeholder Management as a subject on their annual Leadership & Management Development agendas. Makes you think, doesn’t it? (Excuse the pun)

Technorati Tags: Leadership,CEO Reputation,Stakeholder Management

Aspen’s Crisis Expensive

There is a full page spread today on page 16 of the Star newspaper featuring an advertisement by Aspen Nutritionals entitled ‘’ASPEN’s S26 ASSURANCE OF QUALITY’’

Obviously such an advertisement is costly, but what is more important? Protecting your Reputation or the cost? The advertisement clearly spells out what makes the product great.

See also statement: Aspen Pharma – News Room – Quality of S-26 in South Africa Guaranteed http://bit.ly/T2JG2

The Tanzanian Health authorities recently withdrew S26-1 from the market in that country following 4 complaints regarding the quality of the product. The advertisement spells out the reasons – possible counterfeiting and non-adherence to required storage conditions. It further states that Aspen is actively investigating the matter and will take measures required to ensure the matter is managed.

This example offers a number of lessons for companies and Leaders:

1. Is your company prepared for a crisis? Crisis can come in many shapes and sizes, from life safety to product safety crises to just plain allegations  and rumours.  Have you done your homework about what could go wrong and planned the relevant response? Realise that planning for a potential crisis, actually start when you launch a product.

2. In any crisis, there are a number of communication challenges. Have you planned your messages and with whom you need to communicate and on what basis?

3. Has your organisation actually simulated, tested and had your crisis plans audited by a 3rd party to provide objective oversight?

Research shows that those companies who respond quickly and decisively in a crisis**, weathers the storm best.

How prepared are you?

** REPUCOMM – my consultancy has a Crisis Management & Crisis Communication Toolkit available for purchase. This toolkit available as a download or on CD contains all the necessary information to design, develop, write and test a crisis management & crisis communication plan. It provides a fast start and could make the difference between failure and success.

Depends though on a simple premise. What do you cherish the most – Your Reputation or the cost involved in planning and prior preparation?

Your Choice!

Technorati Tags: Product Crisis,Crisis Communication

The Consumer Protection Act poses Reputation Risk

The new SA Consumer Protection Act 68 of 2008 (CPA), which was gazetted on 29 April 2009, and which is scheduled for implementation in two phases, will have an effect on the reputations of companies.

A risk emerging about this Act is that a lack of knowledge in complying with the Act could cost a business dearly. Courts are given comprehensive powers to grant orders dealing with any contravention of this Act. Should a business be convicted for contravening the act, it may face a hefty fine or even imprisonment!

But that is a minor impact compared to the potential impact on reputation.

Such fines will attract negative publicity which could have a spiral effect. Reputation risk means the risk that an institution’s reputation is damaged by one or more than one reputation event, as reflected from negative publicity about its business practices, conduct or financial condition. Such negative publicity, whether true or not, may impair public confidence in the company, result in costly litigation, or lead to a decline in its customer base, business or revenue. Lots of research has shown the impact on shareholder value of incident mismanagement.

Complying with the requirements of this Act will necessitate changes to decision making patterns, procedures, systems and attitudes*. Many a service or product delivering businesses, amongst others, will require specialist advice to ensure that they are complying with the provisions of the CPA.

REPUCOMM with its specialist stakeholder management knowledge and training solutions are ideally placed to assist organisations with this mammoth task of not only complying with the Act’s requirements but bringing about a mindset shift and culture that will factor in the consumer’s stakeholder right from the beginning of the planning cycle and value chain and not after the fact.

Stakeholder Reputation Risk refers to the risk that emerges when the reasonable expectations of stakeholders are not met. For many years companies professed that they took the interests of the consumer at heart when they planned strategies. However continuous scrutiny, scandal revelations and stakeholder complaints have highlighted that basic consumer expectations have not been met, with the result that the regulator decided to take action and protect society. Ultimately this law is a direct result of companies mismanaging the stakeholder process.

It is generally concurred that the CPA, through its specific focus contributes to a more fair and balanced relationship between suppliers and consumers. However the issue is that it is enforced, raising even more mistrust. Will Businesses comply because they are forced or out of free will? Believe you me, actions will now be even more thoroughly scrutinised.

Ultimately, this Act together with legislation such as the National Credit Act and the Competition Act will provide more rights and greater protection to the consumer stakeholder. This will lead to potentially more negative publicity and consumer activism.

Footnote – The impact of the Competition Commission in the Bread and Pharmaceutical pricing collusion sagas should also not be discounted. As one article stated – Look out for Early Morning Raids…..! Intentions will be measured and weighed.

Technorati Tags: Consumer Protection Act,Customer Service,Consumer Reputation,Reputation Risk